The San Antonio Water System board voted unanimously Tuesday to fund Phase I construction of a brackish water desalination plant in southern Bexar County – the most ambitious water diversification project in the city’s history – and enter negotiations with the Vista Ridge Consortium to provide San Antonio with an even greater supply of new water via a privately-owned regional pipeline, a second diversification project of unprecedented scope and cost.
A standing-room only crowd listened intently as SAWS Board Chair Berto Guerra opened the meeting with an unusual 16-minute statement of “personal privilege.” He recounted a Southside breakfast at Don Pedro Mexican Restaurant with Mayor Julián Castro several years ago that laid the foundation for his service as board chair and the board’s long-term strategy on four fronts: integrating the failed BexarMet Water System into SAWS; meeting EPA-mandated improvements to the utility’s troubled sewage system and protecting the aquifer recharge zone from further sewage spills; resolving a long-running lawsuit with the Lower Colorado River Authority; and securing new sources of water to meet San Antonio’s growing population while reducing its dependence on the Edwards Aquifer.
Tuesday was all about the last item on that agenda.
At times reading from a prepared statement, at other times speaking extemporaneously, Guerra declared a unified front among SAWS trustees – including Mayor Julián Castro, SAWS President and CEO Robert Puente and staff – in the wake of speculation that divisions had opened among the parties over the right strategies for achieving San Antonio’s long-term water supply diversification.
Speculation was triggered in early February at a UTSA-sponsored water forum when Puente surprised the audience by indicating the pipeline project – four years in the making – would be shelved in favor of expanded desalination efforts, including a joint venture with CPS Energy to build an on-site, gas-fired plant that could allow the two utilities to idle the desalination plant and augment the electric grid in times of extreme energy demand. Puente’s remarks caused an uproar among business and civic leaders who wanted both long-term diversification projects approved.
The Rivard Report published “San Antonio’s Water Future: Who is Running SAWS?” on Sunday, March 2, reported the Vista Ridge pipeline project, which would provide the city with 50,000 acre-feet of water a year, or enough to supply 150,000 households, could cost $85 million a year for 30 years, or more than $2.5 billion.
“While I appreciate various members of the public, I do not want to commit our ratepayers to $85 million a year for 30 years for a project that may or may not deliver,” Guerra said. “We stand together as a board, we stand behind our Mayor, and we stand behind Robert Puente. So here’s our message: We will diversify our water supply, but not at that price. We will listen to anything that comes before us. Reed (Williams, a trustee), myself, and Robert and our staff will sit across the table from the top contender and we will negotiate and we will diversify our water supply, but not at that price.”
Putting political speculation to rest was not on the SAWS agenda, but it was the clear intent of Guerra and Mayor Castro on Tuesday to do just that. Any divide among the principles, perceived or real, seemed far less evident after Tuesday’s statements and votes.
“We have the opportunity to control our own destiny with regards to desalination,” Mayor Castro said. “I have a tremendous amount of confidence in the board, in the staff, and in Robert’s leadership.” He added that ratepayers deserved every diversification alternative to be be pursued by SAWS. “It should be stated, though, and I’m sure everyone here knows, that we will not necessarily enter into a contract for that water. The goal is not to just take any deal. The goal is to take a deal that makes sense for the ratepayers of SAWS, so I appreciate the work that you (Guerra), that Robert, and that Reed will do to negotiate to see what is possible, and I fully support moving forward with CPS Energy to enhance our desalination efforts.”
The joint SAWS-CPS Energy project has not been subjected to a feasibility study and remains more of a concept than planned project at this juncture.[Read more: “SAWS and CPS Energy Explore New Energy/Water Collaborative.” ]
Price is now the key word as negotiations with Vista Ridge are set to open.
SAWS ratepayers are accustomed to a water supply that is bountiful, pure and inexpensive. Water drawn from the Edwards Aquifer has cost ratepayers less than $400 an acre-foot historically. New water sources will cost far more. When water first begins to flow from the desalination plant in 2016, for example, it will cost around $1,515 an acre-foot, more than three times the cost of Edwards water.
SAWS officials had earlier pegged the price at $1,002 an acre-foot, but under questioning from Williams at the Tuesday meeting, it was acknowledged by staff that the estimated cost did not include an additional $378 an acre-foot to construct an integration pipeline to carry the water from the desalination plant to ratepayers. That cost could be reduced somewhat if SAWS, as expected, qualifies for low-interest state loans from the Texas Water Development Board underwritten by a $2 billion fund created by the Texas Legislature from the Rainy Day Fund in 2013.
Substantial funds already have been spent drilling most of the 13 brackish water production wells situated about 3/4 mile apart in southern Bexar County, three injection wells in Wilson County that will be used to dispose of the mineral waste created by the desalination process and building the pipelines to and from the wells to the plant site.
You can click here to review the staff presentation to the board on the Phase I project and here to download Puente’s presentation.
The Vista Ridge proposal, according to the SAWS staff presentation Tuesday, would cost ratepayers between $1,712-1,947 an acre-foot, and would require SAWS to spend an additional $100 million in capital to integrate the water pumped from the Vista Ridge pipeline into the SAWS network. Remarks by Guerra and Mayor Castro seem to indicate that SAWS will walk away from any deal priced that steeply.
The seven-member SAWS board voted unanimously to support Guerra, Trustee Reed Williams and Puente as a three-member negotiating team that will meet with Vista Ridge Consortium to see if a deal can be achieved. Vista Ridge Consortium is a partnership of the Spanish conglomerate Abengoa Water and Blue Water Systems, an Austin and San Antonio-based investor group, that promises to pipe in water nearly 100 miles from the Carrizo and Queen City aquifers in Lee and Burleson counties east of Austin. Vista Ridge already is pumping water from the aquifers to a number of suburban communities northeast of Austin.
The board vote also formally rejected bids that came from the Dimmit Utilities Water Supply Corp. and Val Verde Water, both of which faced local opposition, questionable water supplies and permitting problems.
The SAWS board action on Tuesday represented the most definitive action ever to diversify San Antonio’s future water supply and reduce its reliance on the Edwards Aquifer, which is now the source of 90 percent of the metro area’s drinking water. Taken together, the two projects eventually could supply enough water to meet the annual needs of 280,000 households in San Antonio.
The brackish water desalination plan has been a decade in the planning and it will be more than another decade from now in 2026 before it is fully completed, but what Puente said will be the largest brackish water desalination plant in the world is moving into the construction phase now that the SAWS board has approved a $109.4 million contract with the Zachry Parsons Water Resources Joint Venture to construct Phase I of the ambitious project.
By October 2016 the desalination plant – which for the moment remains “the plant with no name” – will produce 13,440 acre-feet of water, sufficient to supply the water needs of more than 40,000 households a year. Phase II will double that output to 26,880 acre-feet by 2021, and completion of Phase III will add another 6,720 acre-feet for a total of 43,600 acre-feet of water, enough to supply 130,800 homes for one year.
Watch the video below to take a virtual tour of the plant, which will be built in southern Bexar County at the same site of the utility’s Twin Oaks Aquifer Storage and Recovery facility, where excess water pumped by SAWS from the Edwards Aquifer in wet months is stored underground for later extraction to supplement the city’s water supply in dry months.
Related Stories:
SAWS and CPS Energy Explore New Energy/Water Collaborative.
Documentary Showcases San Antonio’s ‘Green Solutions’ to ‘Water Blues’
Conversation: SAWS Abandons Pipes, Redirects Focus to Desalination Plant
As the article said, SAWS Board recently approved to maintain open conversations with Vista Ridge (the consortium between Blue Water Systems and Abengoa) on their proposed pipeline project to bring water to San Antonio from central Texas.
Although slow, I believe SAWS is moving in the right direction with this decision trying to diversify San Antonio’s water sources, the structure of the deal being proposed by Vista Ridge has a severe impact in the overall project cost making it extremely expensive for SAWS and San Antonio’s citizens.
According to a recent article by Global Water Intelligence the deal proposed by Vista Ridge is a DBOT similar to the way some highways have been developed in TX. DBOT are private financed project structures that try to transfer some major project risks to the developer, but according to SAWS, the proposal presented by Vista Ridge does not to meet this requirement and assumes the water withdraws permits risks will be assumed by SAWS. At the same time, the payment of the infrastructure (the pumps and pipeline) is guaranteed as a fix annual fee. As a consequence, the proposed deal instead of being a truly DBOT project, it is closer to a car “leasing” arrangement with a $2.6 price tag on it. I think SAWS can do better than that.
Here some thoughts for SAWS on how to move forward with this project in a way that will make more sense to San Antonio citizens:
1. Try to divide and assign the proper risks and rewards to the different components of the project so the end result has a reasonable cost. After all, it will be us, San Antonio citizens, who will pay price tag through our rates.
2. Secure the water. Water will be a scarce resource in TX and become a valuable commodity. That water will be for someone else if San Antonio does not secure it. The price of the water should reflect the fact that it is SAWS who is taking the water permits long term risks.
3. Change the contracting model for the pipeline. It does not make any sense to “lease” a pipeline. There are no technological or operational risks associated with this type of infrastructure and probably the private financing costs of the deal proposed by Vista Ridge are making it prohibitive. Instead, consider building the pipeline as a traditional construction project. SAWS has plenty of experience on this field and an exceptional financial rating.
4. Hire local. These types of infrastructure projects can boost the local economy.
5. Consider making the project regional and bring other parties that might be interested to the table. The proposed pipeline crosses many communities that are also thirsty for water and that can help carrying their share of the deal. This is another good reason not to have the infrastructure in the hands of a private entity. It should be owned and managed by the regional entities paying for the project.